Software is an expression of something (an algorithm, layout, etc.). So yes, you can copyright it. What you can't copyright is the underlying principles; e.g., the implementation of Google's search engine is protected by copyright, but the notion of a search engine or page rank is not. If someone wants IP restrictions for that, they need a patent, which has its own set of constraints on what is and is not allowed.

Edit to add: this is also why implementations of software from reverse engineering, like ReactOS, are perfectly legal, so long as they don't copy the actual implementation.